Multiple Debt Load Soars

The amount of so-called multiple debt shouldered by Koreans who take out more than three loans to service existing debt has soared by W91 trillion over the last three-and-a-half years (US$1=W118).

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People with multiple debt usually default eventually, and any interest rate hike could cause the number of bankruptcies to soar.

According to data from the Financial Supervisory Service published by Minjoo Party lawmaker Park Chan-dae, the total loans taken out by multiple debt holders rose from W308.7 trillion in late 2012 to W400.2 trillion as of the end of June this year.

The amount accounts for a whopping third of Korea's total household debt of W1,257 trillion. The number of people with multiple loans rose from 3.32 million to 3.68 million.

Insurance companies issued 41.2 percent of the multiple loans and banks 25.2 percent.

Debtors apparently turned to sub-prime lenders like small savings and loans banks run by insurers to get more money after being turned down by commercial banks when the government tried to stem the rise in household loans.